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BREAKINGVIEWS-UK stimulus gives securitisation a good kick

By Neil Unmack

LONDON, Oct 9 (Reuters Breakingviews) - The Bank of England's funding for lending scheme makes it easier for banks to push cash into the UK economy. But by soaking up issues of high grade mortgage-backed debt, it is helping the rebirth of more esoteric securitisations. It's a benevolent, albeit unintended, consequence.

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- Citigroup expects issuance of bonds backed by prime mortgages to fall to 8 billion pounds in 2013 as a result of the Bank of England's funding for lending scheme. The bank had been expecting issuance of 25-30 billion pounds without the scheme.

- The funding for lending programme allows banks to offer cheaper loans to consumers and companies because lenders can use less risky mortgage bonds to obtain finance from the Bank of England at very low rates.

- Spreads on top-rated bonds backed by high quality UK mortgages have halved in the last three months to 60 basis points from 120 basis points, according to Deutsche Bank AG.

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

- For previous columns by the author, Reuters customers can click on

(Editing by Robert Cole and David Evans) ((neil.unmack@thomsonreuters.com))

Keywords: BREAKINGVIEWS BRITAIN/LENDING